Non-Tariff Barriers in the U.S.-China Trade War

Abstract

We use Chinese customs data to show that unofficial non-tariff barriers were responsible for 50\ %of the overall reduction in Chinese imports from the U.S. during the height of the U.S.-China trade war in 2018 and 2019.We infer non-tariff barriers from the change in imports of U.S. products relative to imports from other countries of the same HS-6 product, after controlling for the change in the relative price of U.S. imports to the same product sold by other countries.These barriers were imposed on a small number of agricultural products, did not apply to stateowned importers, and were larger for products where the share of state importers in total imports of the U.S. product was large.Non-tariff barriers were responsible for more than 90\% of the welfare cost to Chinese consumers of the U.S.-China trade war.The welfare loss to China of a given reduction in imports from the U.S. from non-tariff barriers is about six times larger than an equivalent import decline due to higher tariffs.Non-tariff barriers are more costly compared to tariffs because they applied to some importers and not others, which results in misallocation, and because non-tariff barriers do not generate revenues.

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